Following Apple's release of a 1GB iPod nano and discounts across its iPod shuffle range, Merrill Lynch has increased its estimates for iPod shipments.

Analyst Richard Farmer upped his estimates from 9.8 million to 10.1 million. He believes Apple will ship 53.2 million iPods in fiscal year 2006 (up from 52.3 million).

"The new 1GB iPod nano makes Apple's lower-end offerings more competitive with numerous Asian players," he said, according to MacNN.

The analyst warned that the Intel transition may impact against Mac sales this year, however.